The application of the term 'science' to the social 'sciences' was a terrible mistake. How does the author justify this statement:<p>> "A global study ... finds that economic inequality on a social level cannot be explained by bad choices among the poor nor by good decisions among the rich."<p>...when their article quotes the first author as saying:<p>"Our research does not reject the notion that individual behavior and decision-making may directly relate to upward economic mobility... *we narrowly conclude that biased decision-making does not alone explain a significant proportion of population-level economic inequality.*" ??<p>How do they bring themselves to make the statement:<p>> "Poor decisions were the same across all income groups, including for people who have overcome poverty."<p>... when the study didn't look at any real-world decisions whatsoever, but merely at performance on a battery of academic tests, (whose relationship with real-world decision-making we're expected to take on faith)?
Piketty loves to make fun of this sort of research because the hypothesis they’re disproving has been disproven a hundred times in very simple, empirical ways. But we have to pretend we’re diligently narrowing down the culprit at the heart of wealth inequality, knocking off potential causes one by one.<p>Must be maddening working on a paper like this. Wealth equality is a necessary feature of our economic system yet very serious people pretend like labor can somehow pull themselves up by their bootstraps.
The title is very misleading. What they actually show is that a certain set of cognative biases (_not_ the same as "bad choices") that are pretty much universal can't explain differences in outcome because...well, they're pretty much universal.
Also, I suspect that lack of the ability to photosynthesis, multiply twelve digit numbers in your head, or see gamma rays with your eyebrows will turn out to not explain a significant proportion of population-level economic inequality.
Reminder: If you have an economy with opportunity, you will have inequality. It’s a feature not a bug. Even if everyone in the world got free entry to Harvard (no jokes please) then there are some people who wouldn’t remember to set their alarm, or listen to the lectures, or apply the knowledge, or who just wouldn’t be interested.
> Economic inequality cannot be explained by individual bad choices<p>A more appropriate hypothesis would be that economic inequality cannot be explained by individual bad choices *alone*.<p>Plenty of examples of poor decision making can lead to catastrophic permanent poverty. Drug/alcohol abuse, having children without the right finances, skipping school etc. are just some of the decisions that can directly explain economic inequality.
Interesting they seem to lump all poor and rich together.<p>The poor people I personally know (relatives) are definitely there by bad choices.<p>Perhaps there are too many contexts to apply a simple answer to explain all?
If we accept that it is possible to raise two similar children from birth with a view to creating vastly different outcomes, regardless of what those children think or will, then we must also accept that the great diversities of the natural world make that dynamic a reality.<p>It's no different than taking two dogs of the same breed, and raising one as a farm working dog, and the other as a family pet. The outcomes will seem different, but that's not because one or the other specimen is inherently special or superior.<p>Inherent, individual qualities do exist, sure, and do play a part in the nuance - but ultimately, as individuals, existence has a lot more effect upon <i>us</i> than we do upon <i>it</i>. How could it possibly be otherwise??
My lived experience is simply that most people don't actually care about finances _that_ much.<p>If you went to the gym you would find that 90%+ of people are not trying to deadlift 510kg for a world record and accept that as fact.<p>But somehow when it comes to money it's assumed that everyone's #1 priority above all else is to stack cash, and it's just not, and that cannot be characterised as a "bad decision".
> <i>Our research does not reject the notion that individual behavior and decision-making may directly relate to upward economic mobility. Instead, we narrowly conclude that biased decision-making does not alone explain a significant proportion of population-level economic inequality</i><p>Interesting. It's not cognitive biases of some innate sort.<p>It seems important to me that society should apply boosts to people who can demonstrate ability through some trainable measure that is advantaged by intelligence until they hit some threshold.
Hot take:
1. Income Inequality is directly related to financial education. If you taught people how to save in schools and make good choices things would be very different.
2. The Fed Reserve has made it impossible for a generation of people to save for the past 2.5 decades. Creating the largest wealth disparity in human history.
Why Nations Fail is a great book that everyone has to read. Says that economic inequality is because of political institutions.<p>Specifically, "inclusive" institutions where everyone can become part of the economic system. Anyone can be a government supplier under the same terms, everyone can start their own business under the same terms, everyone can get financing under the same terms, and everyone get the same protection to their own private property.<p>There's a nice Economic effect called "Hume-Cantillon Effect":<p>> Furthermore, he posited that the original recipients of new money enjoy higher standards of living at the expense of later recipients. The concept of relative inflation, or a disproportionate rise in prices among different goods in an economy, is now known as the Cantillon Effect.
> ... the rate of interest was determined by the supply and demand on the loanable funds market—an insight usually attributed to Scottish philosopher David Hume.<p><a href="https://en.m.wikipedia.org/wiki/Richard_Cantillon#Monetary_theory" rel="nofollow noreferrer">https://en.m.wikipedia.org/wiki/Richard_Cantillon#Monetary_t...</a>
Even if people can make the "right choice" in a controlled setting with no stakes involved, that doesn't mean they can or want to make choices in the same manner when things are important, or it's their own life, or there are strong emotions, etc...<p>So how does the study address that?
How difficult is it to understand that the ability of making the right choices depends on how you are raised. Where you grew up etc.
People who say success is a choice are conpletely wrong.